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BP Business Economic Loss Claim Appeal 2016-94: Claim properly treated under existing business framework


The following is an Appeal Panel Decision issued pursuant to Section 6 of the BP Deepwater Horizon Economic & Property Damages Settlement Agreement and the Rules Governing the BP Appeals Process. Links may have been added to assist the reader. The original decision may be found here, as well as a glossary of BP Settlement terms.

BP appeals the BEL award of $217,772.05 (pre-RTP) to Claimant, a Seminole, Florida stucco and plastering contractor. The sole issue on appeal is whether the Claims Administrator erred by processing this claim as a standard BEL Claim under the framework in Exhibit 4 or whether it should have been processed as a Failed Business Claim pursuant to Exhibit 6. BP seeks a remand or, alternatively, submits a Final Proposal of $0.

The record reveals a significant downturn in the claimant’s business such that Mr. [XXXXX] who was age 69 at the end of 2011, decided to retire. The business’s last day of operations was December 31, 2011 and it filed its final tax return in February of 2012.

The Settlement Agreement defines a “Failed Business” as “[a] Business Entity that commenced operations prior to November 1, 2008 and, subsequent to May 1, 2010 but prior to December 31, 2011 either (i) ceased operations and wound down, (ii) entered bankruptcy, or (iii) otherwise initiated or completed a liquidation of substantially all of its assets . . .” BP contends that Claimant fits this definition, noting that it listed its assets as “$0” on its final tax return and initiated a sale of assets in August of 2011.

The claimant maintains that it kept assets beyond December 31, 2011. A summary of review was requested in which the Program explained why this claim was evaluated as a BEL claim. First, as the claimant notes, the business ceased operations on December 31, 2011, not prior to December 31 as required by the Settlement Agreement. Further, the Program accountants investigated Claimant’s tax returns. At the end of 2010, Claimant reported $307,414 in assets on Schedule L, yet reported $0 at the beginning of 2011 without any sale of assets in between. Claimant sold two trucks in 2011 for a total of $5,570 and continued to maintain a storage facility during 2012 in which it stored equipment that it later sold in March, 2012.

There is no indication that the claimant entered bankruptcy, nor did it cease operations prior to December 31, 2011 as required by the Settlement Agreement. Claimant clearly did not liquidate all of its business assets prior to December 31, 2011, so the result turns upon whether it liquidated “substantially all” of them. The Settlement Agreement does not define “substantially all” and this panelist is left to decide whether Claimant disposed of its assets “to a great and significant extent” (Oxford). This is necessarily a judgment call by the Program and, given that the record does not contain an explanation of how Claimant’s assets dropped from over $300,000 to none by the beginning of 2011, coupled with the clear indications that some assets remained beyond December 31, 2011, I cannot conclude that the Claims Administrator’s decision to process this claim under the standard BEL framework was an error. Accordingly, BP’s appeal is denied.

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